Vehicle to Grid: Slow Growth and a Small Market Even in 2022
One of the tantalizing possibilities of electric cars is that they can give power back to the grid when plugged in, working just like battery backup to level out power loads. The theoretical possibilities are endless.
According to AC Propulsion in a white paper (PDF), “Cars pack a lot of power: one typical electric-drive vehicle can put out over 10 kilowatts, the average draw of 10 houses. There are 250 million registered cars in the U.S. Imagine if we could harness even two percent of that energy: 50 million homes could be powered!”
Still on the Launching Pad
Unfortunately, that’s a big if. So far, vehicle to grid, also known as V2G, hasn’t progressed beyond the demonstration phase. The most impressive trial to date is on the University of Delaware campus, where long-time champion Willett Kempton has 15 BMW Mini-E cars acting as a mini power plant. It’s a project with NRG Energy, which is paying (around $5 per vehicle per day) for the electrons it gets from the parked cars.
The Department of Defense has been a big V2G backer. Early this year, it said it was awarding $20 million to install 500 V2G-enabled plug-in cars at military bases around the U.S. by the end of the year. The military projects it could make $150 per day from this endeavor. There are also pilot projects in Europe and Japan.
What's the Holdup?
If it works, commercialization would seem to be the next step, but a new report from Navigant Research puts the payback far in the future. Worldwide V2G capacity this year, the report says, is less than nine megawatts. Revenue in 2013 is just $900,000, it said. Even by 2022, V2G will be a $190.7 million market. That’s not nothing, but it has a certain “why bother” aspect to it.
Navigant has an explanation for the slow growth of what would appear to be a very useful technology as more and more EVs are added to the grid, along with renewable energy sources that produce power intermittently. V2G and other innovations thrive in a deregulated electricity market, but are unlikely to make much headway with regulated utilities.
I asked Navigant’s Scott Shepard, a research analyst, to explain why this is so in terms anyone could understand. “Energy service companies looking to invest in electric vehicles for grid services are more likely to do so in regions with organized competitive electricity markets like PJM Interconnection in the Northeast or ERCOT in Texas.”
The U.S. is a patchwork of regulated and deregulated utilities, with 3,100 individual companies producing three trillion kilowatt-hours annually to 109 million residential customers (and 14 million commercial ones). By 2000, 24 states had deregulated in this $210 billion market.
Shepard added, “Regulated electricity markets provide few opportunities for energy service companies because utilities with geographic monopolies manage grid services internally.” In other words, they’re not buying what V2G companies are selling, even if it’s beneficial to them.
There are rough parallels to the ridiculous situation in a majority of states that prohibits EV charging companies from billing customers by the kilowatt hour. Instead, they have to charge by the hour, which leads to all sorts of inequities. The laws have nothing to do with electric cars, but were put in place to protect utilities. State public utility commissions can change the rules, but only about a dozen have actually taken that step.
The result, as Michael Farkas of CarCharging Group pointed out to me last week, is that an EV charging at 3.3 kilowatts (the Nissan LEAF) pays the same rate as an EV getting twice as many electrons in an hour. But just because the situation is absurd doesn't mean it will be resolved quickly.
Navigant projects that countries with high EV penetration will eventually adopt market structures and rules that are friendlier to V2G. And if wind and solar installations increase, there will be more demand for energy storage—and the opportunity V2G presents. Does that have to take until 2022 and beyond? Apparently so.
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